MTS Reports Continued Operating Improvements

Apr 25, 2001, 01:00 ET from MTS Systems Corporation

    EDEN PRAIRIE, Minn., April 25 /PRNewswire/ --
     MTS Systems Corporation (Nasdaq:   MTSC) today reported net income of
 $3.5 million, or $0.17 per share, for the second quarter ended March 31, 2001,
 compared to $1.4 million, or $0.07 per share, in the prior year.  Second
 quarter 2001 revenue was $97.9 million, compared to $95.3 million in the prior
 year.  Revenue and net income for the second quarter exceeded consensus
 estimates.  Orders for the second quarter were $88 million, compared to
 $101 million in the second quarter of fiscal 2000.
     For the first six months of fiscal 2001, net income was $3.8 million, or
 $0.18 per share, compared to a loss of $4.7 million, or ($0.22) per share for
 the first six months of fiscal 2000.  Revenue for the first six months of
 fiscal 2001 was $182.9 million, essentially flat with the revenue for the
 first six months of fiscal 2000.  With orders of $191 million for the first
 six months of fiscal 2001, revenue backlog totaled $178 million at March 31,
 2001.
     "Solid operating performance highlighted our second quarter," said Sidney
 W. Emery, Jr., chairman and CEO.  "These improvements were in line with our
 internal plans and reflect progress in the mechanical testing and simulation
 sector.  New business included an increased demand for our rolling track
 systems for the tire, passenger car and specialty vehicle markets, as well as
 strength across the globe in aircraft structural testing.  Especially well
 received were our new software simulation products announced in March at the
 Society of Automotive Engineers' exposition in Detroit.  Integrated with MTS
 hardware and our alliance partners' software solvers, these new products will
 enhance our customers' time to market.
     "We did, however, experience a slow down in North American business
 levels.  Overall, we were $10 million off our plan for new orders -- the
 result of aggressive cut backs in capital spending in the North American
 automotive market and a precipitous drop in North American demand for our
 factory automation components in the semiconductor, electronics assembly and
 industrial markets.  These were offset somewhat by robust orders in Europe and
 Asia in both sectors.
     "Looking ahead, our outlook for fiscal year 2001 remains cautious as the
 North American economy has slowed considerably over the past four months and
 we expect this situation to continue in the near-term.  So far this has not
 significantly impacted our European or Asian business, but will likely have a
 negative affect on new order levels in the second half.  However, the
 combination of our backlog position and continued emphasis on operating
 improvement supports our outlook of significant operating earnings growth this
 year.  For the third quarter we are projecting revenue to be flat with the
 second quarter in the middle $90 million range with earnings per share in the
 mid to high teens.  While much depends upon the market, we remain comfortable
 with the consensus estimate of MTS' full-year earnings per share being in the
 low to mid sixties."
 
     Sector Results
 
     Mechanical Testing and Simulation Sector:
     Revenue for this sector was $76.2 million for the second quarter ended
 March 31, 2001, up 6.9% compared to revenue of $71.3 million for second
 quarter 2000.  With orders of $68 million, backlog declined approximately
 $8 million in the quarter.  Sector gross margin, as a percentage of revenue,
 was 34.2% in the quarter, up from 33.8% in the second quarter last year.
 Operating earnings of $5.9 million were better than planned and improved
 substantially from $0.8 million last year.
     For the first six months of fiscal 2001, revenue for the sector increased
 to $140.5 million, essentially unchanged from the prior year.  Sector gross
 margin for the first six months of fiscal 2001 was 33.8%, compared to 27.8%
 for the first six months of fiscal 2000.  Operating earnings of $5.8 million
 were much improved over the $6.7 million loss reported in the previous year.
 
     Factory Automation Sector:
     Revenue for this sector was $21.7 million for the second quarter ended
 March 31, 2001, down 9.5% compared to revenue of $24.0 million for second
 quarter 2000.  This reflects a substantial slowdown in the motion control
 business in North America, as we experienced aggressive cutbacks in both order
 quantities and previously planned shipments across the board.  Orders of
 $20 million resulted in a $2 million decrease in backlog for the sector.
 Gross margin dipped from 43.1% in the second quarter last year to 41.3% this
 year.  At $0.9 million, operating earnings were substantially below plan and
 the $3.2 million reported for second quarter last year.
     For the first six months of fiscal 2001, revenue for the sector increased
 slightly to $42.4 million, compared to $42.1 million in the second quarter
 2000.  Gross margins were down at 40.5% versus 43.2% in the previous year.
 Sector earnings for the first six months of fiscal 2001 were $3.0 million,
 down approximately $1.7 million from the prior year first half.
 
     This release contains "forward-looking statements" made pursuant to the
 safe harbor provision of the Private Securities Litigation Reform Act of 1995
 and are subject to certain risks and uncertainties, as well as assumptions,
 that could cause actual results to differ materially from historical results
 and those presently anticipated or projected.  In addition to the factors
 discussed above, other important risk factors are delineated in the Company's
 SEC reports, including but not limited to the reports on Form 10-K for the
 year ended September 30, 2000 and the Form 10-Q reports filed by the Company.
     MTS Systems Corporation helps customers accelerate and improve their
 design, development and manufacturing processes.  MTS products include
 modeling and testing software, computer-based testing and simulation systems
 and consulting services for determining the mechanical behavior of materials,
 products and structures, and control instrumentation products for automating
 manufacturing processes.  MTS had 2,350 employees and revenue of $392 million
 for the fiscal year ended September 30, 2000.  Additional information on MTS
 can be found on the worldwide web at http://www.mts.com
 
     Live conference call today at 5:00 p.m. CDT:
       888-928-9177 (U.S.) or 1-712-271-0561 (International); passcode "MTS
       Second Quarter"; leader "Chip Emery"
     Taped replay through 11:00 p.m. (CDT) May 2, 2001:
      800-685-2730 (U.S.) or 1-402-998-1087 (international)
     Live over the Internet or for replay through 11:00 p.m. (CDT) May 2, 2001:
      Access MTS's website above>Investor>Calendar of Events>click on the
       link.
 
 
                            MTS SYSTEMS CORPORATION
                       Consolidated Statements of Income
                     (unaudited - in thousands of dollars,
                        except earnings per share data)
 
                                Three Months Ended         Six Months Ended
                                     March 31                  March 31
                                2001          2000        2001          2000
 
     Net revenue              $97,935       $95,291     $182,924      $182,505
     Cost of revenue           62,876        60,821      118,246       125,249
     Gross profit              35,059        34,470       64,678        57,256
 
     Operating expenses:
       Selling                 14,223        14,611       28,228        29,004
       General & administrative 8,255         9,145       16,766        16,818
       Research & development   5,776         6,684       10,864        13,363
         Total operating
          expenses             28,254        30,440       55,858        59,185
 
       Income (loss) from
        operations              6,805         4,030        8,820        (1,929)
 
     Interest expense           1,544         1,648        3,033         3,004
     Interest income             (145)         (161)        (251)         (279)
     Other expense (income), net (461)          331         (268)        2,354
       Income (loss) before
        income taxes            5,867         2,212        6,306        (7,008)
     Income tax provision
      (benefit)                 2,347           841        2,522        (2,340)
 
       Net income (loss)       $3,520        $1,371       $3,784       ($4,668)
 
     Basic earnings (loss)
      per share                 $0.17         $0.07        $0.18        ($0.22)
     Weighted average number
      of common shares
      outstanding -- basic     20,661        20,836       20,691        20,858
 
     Diluted earnings (loss)
      per share                 $0.17         $0.07        $0.18        ($0.22)
     Weighted average number
      of common shares
      outstanding -- diluted   20,866        20,928       20,817        20,858
 
 
                            MTS SYSTEMS CORPORATION
                     Condensed Consolidated Balance Sheets
                     (unaudited - in thousands of dollars)
 
                                                        March 31,     Sept. 30,
                                                          2001           2000
 
     Cash and cash equivalents                           $8,852         $8,211
     Accounts receivable                                 90,030        117,866
     Unbilled contracts receivable                       36,016         26,765
     Inventories                                         75,157         62,520
     Prepaid expenses                                    11,912          9,911
       Total current assets                             221,967        225,273
 
     Property and equipment, net                         69,580         72,081
     Other assets                                        33,291         32,880
 
       Total assets                                    $324,838       $330,234
 
 
     Notes payable to banks                              $2,113        $11,945
     Current maturities of long-term debt                 5,597          5,663
     Accounts payable                                    17,942         22,755
     Accrued liabilities                                 43,739         49,612
     Advanced billings to customers                      33,236         18,673
       Total current liabilities                        102,627        108,648
 
     Deferred income taxes                                5,728          5,628
     Long term debt                                      58,195         58,104
 
     Total shareholders' investment                     158,288        157,854
 
       Total liabilities and shareholders' investment  $324,838       $330,234
 
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X14244183
 
 

SOURCE MTS Systems Corporation
    EDEN PRAIRIE, Minn., April 25 /PRNewswire/ --
     MTS Systems Corporation (Nasdaq:   MTSC) today reported net income of
 $3.5 million, or $0.17 per share, for the second quarter ended March 31, 2001,
 compared to $1.4 million, or $0.07 per share, in the prior year.  Second
 quarter 2001 revenue was $97.9 million, compared to $95.3 million in the prior
 year.  Revenue and net income for the second quarter exceeded consensus
 estimates.  Orders for the second quarter were $88 million, compared to
 $101 million in the second quarter of fiscal 2000.
     For the first six months of fiscal 2001, net income was $3.8 million, or
 $0.18 per share, compared to a loss of $4.7 million, or ($0.22) per share for
 the first six months of fiscal 2000.  Revenue for the first six months of
 fiscal 2001 was $182.9 million, essentially flat with the revenue for the
 first six months of fiscal 2000.  With orders of $191 million for the first
 six months of fiscal 2001, revenue backlog totaled $178 million at March 31,
 2001.
     "Solid operating performance highlighted our second quarter," said Sidney
 W. Emery, Jr., chairman and CEO.  "These improvements were in line with our
 internal plans and reflect progress in the mechanical testing and simulation
 sector.  New business included an increased demand for our rolling track
 systems for the tire, passenger car and specialty vehicle markets, as well as
 strength across the globe in aircraft structural testing.  Especially well
 received were our new software simulation products announced in March at the
 Society of Automotive Engineers' exposition in Detroit.  Integrated with MTS
 hardware and our alliance partners' software solvers, these new products will
 enhance our customers' time to market.
     "We did, however, experience a slow down in North American business
 levels.  Overall, we were $10 million off our plan for new orders -- the
 result of aggressive cut backs in capital spending in the North American
 automotive market and a precipitous drop in North American demand for our
 factory automation components in the semiconductor, electronics assembly and
 industrial markets.  These were offset somewhat by robust orders in Europe and
 Asia in both sectors.
     "Looking ahead, our outlook for fiscal year 2001 remains cautious as the
 North American economy has slowed considerably over the past four months and
 we expect this situation to continue in the near-term.  So far this has not
 significantly impacted our European or Asian business, but will likely have a
 negative affect on new order levels in the second half.  However, the
 combination of our backlog position and continued emphasis on operating
 improvement supports our outlook of significant operating earnings growth this
 year.  For the third quarter we are projecting revenue to be flat with the
 second quarter in the middle $90 million range with earnings per share in the
 mid to high teens.  While much depends upon the market, we remain comfortable
 with the consensus estimate of MTS' full-year earnings per share being in the
 low to mid sixties."
 
     Sector Results
 
     Mechanical Testing and Simulation Sector:
     Revenue for this sector was $76.2 million for the second quarter ended
 March 31, 2001, up 6.9% compared to revenue of $71.3 million for second
 quarter 2000.  With orders of $68 million, backlog declined approximately
 $8 million in the quarter.  Sector gross margin, as a percentage of revenue,
 was 34.2% in the quarter, up from 33.8% in the second quarter last year.
 Operating earnings of $5.9 million were better than planned and improved
 substantially from $0.8 million last year.
     For the first six months of fiscal 2001, revenue for the sector increased
 to $140.5 million, essentially unchanged from the prior year.  Sector gross
 margin for the first six months of fiscal 2001 was 33.8%, compared to 27.8%
 for the first six months of fiscal 2000.  Operating earnings of $5.8 million
 were much improved over the $6.7 million loss reported in the previous year.
 
     Factory Automation Sector:
     Revenue for this sector was $21.7 million for the second quarter ended
 March 31, 2001, down 9.5% compared to revenue of $24.0 million for second
 quarter 2000.  This reflects a substantial slowdown in the motion control
 business in North America, as we experienced aggressive cutbacks in both order
 quantities and previously planned shipments across the board.  Orders of
 $20 million resulted in a $2 million decrease in backlog for the sector.
 Gross margin dipped from 43.1% in the second quarter last year to 41.3% this
 year.  At $0.9 million, operating earnings were substantially below plan and
 the $3.2 million reported for second quarter last year.
     For the first six months of fiscal 2001, revenue for the sector increased
 slightly to $42.4 million, compared to $42.1 million in the second quarter
 2000.  Gross margins were down at 40.5% versus 43.2% in the previous year.
 Sector earnings for the first six months of fiscal 2001 were $3.0 million,
 down approximately $1.7 million from the prior year first half.
 
     This release contains "forward-looking statements" made pursuant to the
 safe harbor provision of the Private Securities Litigation Reform Act of 1995
 and are subject to certain risks and uncertainties, as well as assumptions,
 that could cause actual results to differ materially from historical results
 and those presently anticipated or projected.  In addition to the factors
 discussed above, other important risk factors are delineated in the Company's
 SEC reports, including but not limited to the reports on Form 10-K for the
 year ended September 30, 2000 and the Form 10-Q reports filed by the Company.
     MTS Systems Corporation helps customers accelerate and improve their
 design, development and manufacturing processes.  MTS products include
 modeling and testing software, computer-based testing and simulation systems
 and consulting services for determining the mechanical behavior of materials,
 products and structures, and control instrumentation products for automating
 manufacturing processes.  MTS had 2,350 employees and revenue of $392 million
 for the fiscal year ended September 30, 2000.  Additional information on MTS
 can be found on the worldwide web at http://www.mts.com
 
     Live conference call today at 5:00 p.m. CDT:
       888-928-9177 (U.S.) or 1-712-271-0561 (International); passcode "MTS
       Second Quarter"; leader "Chip Emery"
     Taped replay through 11:00 p.m. (CDT) May 2, 2001:
      800-685-2730 (U.S.) or 1-402-998-1087 (international)
     Live over the Internet or for replay through 11:00 p.m. (CDT) May 2, 2001:
      Access MTS's website above>Investor>Calendar of Events>click on the
       link.
 
 
                            MTS SYSTEMS CORPORATION
                       Consolidated Statements of Income
                     (unaudited - in thousands of dollars,
                        except earnings per share data)
 
                                Three Months Ended         Six Months Ended
                                     March 31                  March 31
                                2001          2000        2001          2000
 
     Net revenue              $97,935       $95,291     $182,924      $182,505
     Cost of revenue           62,876        60,821      118,246       125,249
     Gross profit              35,059        34,470       64,678        57,256
 
     Operating expenses:
       Selling                 14,223        14,611       28,228        29,004
       General & administrative 8,255         9,145       16,766        16,818
       Research & development   5,776         6,684       10,864        13,363
         Total operating
          expenses             28,254        30,440       55,858        59,185
 
       Income (loss) from
        operations              6,805         4,030        8,820        (1,929)
 
     Interest expense           1,544         1,648        3,033         3,004
     Interest income             (145)         (161)        (251)         (279)
     Other expense (income), net (461)          331         (268)        2,354
       Income (loss) before
        income taxes            5,867         2,212        6,306        (7,008)
     Income tax provision
      (benefit)                 2,347           841        2,522        (2,340)
 
       Net income (loss)       $3,520        $1,371       $3,784       ($4,668)
 
     Basic earnings (loss)
      per share                 $0.17         $0.07        $0.18        ($0.22)
     Weighted average number
      of common shares
      outstanding -- basic     20,661        20,836       20,691        20,858
 
     Diluted earnings (loss)
      per share                 $0.17         $0.07        $0.18        ($0.22)
     Weighted average number
      of common shares
      outstanding -- diluted   20,866        20,928       20,817        20,858
 
 
                            MTS SYSTEMS CORPORATION
                     Condensed Consolidated Balance Sheets
                     (unaudited - in thousands of dollars)
 
                                                        March 31,     Sept. 30,
                                                          2001           2000
 
     Cash and cash equivalents                           $8,852         $8,211
     Accounts receivable                                 90,030        117,866
     Unbilled contracts receivable                       36,016         26,765
     Inventories                                         75,157         62,520
     Prepaid expenses                                    11,912          9,911
       Total current assets                             221,967        225,273
 
     Property and equipment, net                         69,580         72,081
     Other assets                                        33,291         32,880
 
       Total assets                                    $324,838       $330,234
 
 
     Notes payable to banks                              $2,113        $11,945
     Current maturities of long-term debt                 5,597          5,663
     Accounts payable                                    17,942         22,755
     Accrued liabilities                                 43,739         49,612
     Advanced billings to customers                      33,236         18,673
       Total current liabilities                        102,627        108,648
 
     Deferred income taxes                                5,728          5,628
     Long term debt                                      58,195         58,104
 
     Total shareholders' investment                     158,288        157,854
 
       Total liabilities and shareholders' investment  $324,838       $330,234
 
 
                     MAKE YOUR OPINION COUNT -- Click Here
                http://tbutton.prnewswire.com/prn/11690X14244183
 
 SOURCE  MTS Systems Corporation